CTI Industries Corp. (CTIB, Financial) filed Quarterly Report for the period ended 2009-03-31.
CTI Industries Corp. is one of the leading manufacturers and sellers of mylar balloons in the world. The company also sells latex balloons novelty and ``message`` items such as mugs and banners and toy products such as inflatable masks punch balls and water bombs and produces laminated and specialty films for food packaging and other commercial uses. The company's products are sold throughout the United States and in foreign countries through a wide variety of retail outlets including grocery general merchandise and drugstore chains. CTI Industries Corp. has a market cap of $3.6 million; its shares were traded at around $1.3 with a P/E ratio of 3.3 and P/S ratio of 0.1.
Advertising and Marketing. During the three months ended March 31, 2009, advertising and marketing expenses were $388,000 or 4.0% of net sales for the period, compared to $347,000 or 3.2% of net sales for the same period of 2008. The increase is attributable principally to an increase in advertising and marketing salaries by $22,000 and advertising associated with the Company s ZipVacâ„¢ product line of $25,000.
Net Income. For the three months ended March 31, 2009, the Company had net income of $93,000 or $0.03 per share (basic and diluted), compared to net income of $279,000 for the same period of 2008 or $0.10 per share (basic and diluted).
Significant changes in working capital items during the three months ended March 31, 2009 consisted of (i) an increase in accounts receivable of $728,000, (ii) an increase in trade payables of $661,000 (iii) depreciation and amortization in the amount of $468,000, (iv) an increase of $175,000 in prepaid expenses and other assets and (v) a decrease in inventories of $228,000.
Liquidity and Capital Resources. At March 31, 2009, the Company had cash balances of $244,000 compared to cash balances of $692,000 for the same period in 2008. At March 31, 2009, the Company had a working capital balance of $1,594,000 compared to a working capital balance of $1,466,000 at December 31, 2008.
Also, under the loan agreement, we were required to purchase a swap agreement with respect to at least 60% of the mortgage and term loan portions of our loan. On April 5, 2006, we entered into a swap arrangement with RBS Citizens N.A. (formerly Charter One Bank) with respect to 60% of the principal amounts of the mortgage loan and the term loan, which had the effect of fixing the interest rate for such portions of the loans at 8.49% for the balance of the loan terms. On January 28, 2008 we entered into a swap arrangement with RBS Citizens for an additional $3,000,000 on our revolving line of credit, which had the effect of fixing the interest rate at 6.17%. These swap agreements are designated as a cash flow hedge and hedge the Company s exposure to interest rate fluctuations on the Company s floating rate loans. These swap arrangements are derivative financial instruments with respect to which we determine and record the fair market value each quarter. We record the fair market value of these contracts in the balance sheet, with an offset to other comprehensive loss. The fair market value of these swap agreements as of March 31, 2009 was a liability of $315,000. For the three months ended March 31, 2009, the other comprehensive loss included $27,000 of unrecognized gain representing the change in the mark-to-market value of the Company s interest rate swap agreements for such periods. The swap agreements require monthly settlements of the difference between the amount to be received and paid under the agreements, the amount of which is recognized in current earnings as interest expense.
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CTI Industries Corp. is one of the leading manufacturers and sellers of mylar balloons in the world. The company also sells latex balloons novelty and ``message`` items such as mugs and banners and toy products such as inflatable masks punch balls and water bombs and produces laminated and specialty films for food packaging and other commercial uses. The company's products are sold throughout the United States and in foreign countries through a wide variety of retail outlets including grocery general merchandise and drugstore chains. CTI Industries Corp. has a market cap of $3.6 million; its shares were traded at around $1.3 with a P/E ratio of 3.3 and P/S ratio of 0.1.
Highlight of Business Operations:
During the three months ended March 31, 2009, there were two customers whose purchases represented more than 10% of the Company s consolidated net sales. The sales to each of these customers for the three months ended March 31, 2009 were $2,500,000 or 26.0% and $1,712,000 or 17.8% of consolidated net sales, respectively. Sales of these customers in the same period of 2008 were $1,870,000 or 17.4%, and $1,762,000 or 16.4% of consolidated net sales, respectively. As of March 31, 2009, the total amount owed to the Company by these customers was $1,602,000 or 24.7% and $1,027,000, or 15.8%, of the Company s consolidated accounts receivables. The amounts owed at March 31, 2008 were $1,313,000, or 18.9% and $1,412,000, or 20.4% of the Company s consolidated net accounts receivables, respectively.Advertising and Marketing. During the three months ended March 31, 2009, advertising and marketing expenses were $388,000 or 4.0% of net sales for the period, compared to $347,000 or 3.2% of net sales for the same period of 2008. The increase is attributable principally to an increase in advertising and marketing salaries by $22,000 and advertising associated with the Company s ZipVacâ„¢ product line of $25,000.
Net Income. For the three months ended March 31, 2009, the Company had net income of $93,000 or $0.03 per share (basic and diluted), compared to net income of $279,000 for the same period of 2008 or $0.10 per share (basic and diluted).
Significant changes in working capital items during the three months ended March 31, 2009 consisted of (i) an increase in accounts receivable of $728,000, (ii) an increase in trade payables of $661,000 (iii) depreciation and amortization in the amount of $468,000, (iv) an increase of $175,000 in prepaid expenses and other assets and (v) a decrease in inventories of $228,000.
Liquidity and Capital Resources. At March 31, 2009, the Company had cash balances of $244,000 compared to cash balances of $692,000 for the same period in 2008. At March 31, 2009, the Company had a working capital balance of $1,594,000 compared to a working capital balance of $1,466,000 at December 31, 2008.
Also, under the loan agreement, we were required to purchase a swap agreement with respect to at least 60% of the mortgage and term loan portions of our loan. On April 5, 2006, we entered into a swap arrangement with RBS Citizens N.A. (formerly Charter One Bank) with respect to 60% of the principal amounts of the mortgage loan and the term loan, which had the effect of fixing the interest rate for such portions of the loans at 8.49% for the balance of the loan terms. On January 28, 2008 we entered into a swap arrangement with RBS Citizens for an additional $3,000,000 on our revolving line of credit, which had the effect of fixing the interest rate at 6.17%. These swap agreements are designated as a cash flow hedge and hedge the Company s exposure to interest rate fluctuations on the Company s floating rate loans. These swap arrangements are derivative financial instruments with respect to which we determine and record the fair market value each quarter. We record the fair market value of these contracts in the balance sheet, with an offset to other comprehensive loss. The fair market value of these swap agreements as of March 31, 2009 was a liability of $315,000. For the three months ended March 31, 2009, the other comprehensive loss included $27,000 of unrecognized gain representing the change in the mark-to-market value of the Company s interest rate swap agreements for such periods. The swap agreements require monthly settlements of the difference between the amount to be received and paid under the agreements, the amount of which is recognized in current earnings as interest expense.
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